Key Takeaways
- McDonald’s shares rose 6% after third-quarter adjusted EPS of $3.57 beat the $3.38 analysts expected, even as U.S. comparable sales slipped 0.2%.
- Franchise fees and gains on selling restaurants drove the profit, while U.S. guest counts fell.
- Burger King owner Restaurant Brands International and Chipotle grew sales last quarter, so McDonald’s U.S. slump looks like its own problem.
- The value menu McDonald’s rolls out in early 2027 will decide where the stock goes from here, and it still trades below its five-year average P/E.
McDonald’s (MCD) is up 6% today after a third-quarter profit beat, even though its U.S. business went backward.
That’s an awkward contrast with Burger King owner Restaurant Brands International (QSR) and Chipotle Mexican Grill (CMG), which both grew sales in quarters reported last week.
Profit up, visits down
Adjusted EPS rose 11% to $3.57, ahead of the $3.38 consensus. But revenue rose just 1% to $7.16 billion, short of the $7.28 billion estimate.
The profit came from franchised margins, up 3% to $3.8 billion, and from selling restaurants to franchisees: those gains nearly tripled, to $97 million.
U.S. comparable sales slipped 0.2%, the first decline in six quarters, as fewer guests offset bigger checks.
Going in, analysts expected earnings per share to keep growing through 2028.
After this quarter, McDonald’s needs $3.10 of adjusted EPS in the fourth quarter to hit analysts’ $12.88 for 2026. That’s a touch under the $3.12 it earned a year ago.
TIKR tracks 33 analysts on McDonald’s. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on McDonald’s, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See McDonald’s’ Analyst Ratings
Value has to bring visits back
On the earnings call, CEO Chris Kempczinski said McDonald’s needs to get “entry-level value right – it’s [the] final piece that’s missing.”
Only 60% to 65% of U.S. restaurants ran its under-$3 menu as recommended in the second quarter, management said in August. Now it’s testing two value menus in about 1,900 restaurants and plans to roll the winner out nationwide in early 2027.
That menu would go straight at Burger King, whose U.S. comparable sales jumped 8.4% in the third quarter. Restaurant Brands is up 4% today. Can Burger King keep up that pace once all of McDonald’s franchisees are running a cheap menu?
It’d be easy to blame a stretched consumer. But Chipotle’s transactions rose 0.8% in the third quarter, its third straight quarter of gains, and its stock is up 4% today.
Still cheap for McDonald’s
McDonald’s forward P/E has bounced off its five-year low of 17.5x in September. It was 20x on Monday, still well below its five-year average of 24x.
Today’s jump takes it to about 21x.
I think that’s a fair price to wait for the value fix. Earnings are already growing, and if the 2027 menu brings U.S. guests back, the multiple has room to climb.
Of course, CFO Ian Borden wouldn’t promise better U.S. comparable sales in the fourth quarter. The next real read is 2027 guidance early next year.
So what is McDonald’s stock actually worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what McDonald’s could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
